how do you spin-duplicate an object to make a grenade?
As Sandro suggested: the objects scaling (marked in the image) causes the - in this case (as Kheetor mentioned) - undesired outcome.
Your object is scaled to about 45% of it's original size, so every iteration of the array is scaled to a 45% again, getting smaller and smaller every time.
Select the object and press 'ctrl+a', then select 'Scale'.


Next Step: Your object and the "rotation object" need the same origin. Go into edit-mode and move all geometry to the edge of the circle:


Then just rotate your circle around the Z-axis: